Share Repurchase as a Tool of Financial Restructuring: A Case Study

In the present competitive business environment, financial restructuring plays a pivotal role to strengthen the firm's financial position and also generate value for the shareholders in order to ensure efficient use of finance. Among various methods of financial restructuring available to a company, Buyback of Shares is a very significant one. The present paper investigates whether the financial restructuring undertaken by the company through share repurchase helps in the improvement of the financial performance by means of some traditional tools like Earning per Share(EPS), Dividend per Share (DPS), Return on Investment (ROI) and Market value to Book value ratio(M/B) and modern tools like Economic Value Added (EVA), Market Value Added(MVA) and Shareholders Value Added(SVA). For analyzing the impact of share buyback on share price, the concept of sub-periodic growth rate has been applied by using the ”Kinked Exponential Models”. In this paper “Control Sample Methodology” has been applied to facilitate the analysis of all the financial parameters and share prices’ growth rate. The data has been collected from “Capitaline 2000” database package. The findings indicate that share buyback is a significant tool of financial restructuring which leads to greater financial flexibility to the corporate firms. However, this finding of the study based on one company cannot be generalized for the industry as well as the economy as a whole in the long run, which demands a broad based research study.